Last week, AOL chief executive Tim Armstrong dismissed the notion that there was an editorial conflict of interest in having Arrington--one of the most influential, and divisive, figures in Silicon Valley--lead the fund. "TechCrunch is a different property and they have different standards," Armstrong said in an interview with the New York Times that was published Thursday. "We have a traditional understanding of journalism with the exception of TechCrunch, which is different but is transparent about it."

Armstrong said AOL invested about $10 million in CrunchFund, and that it would operate as a separate entity from AOL Ventures, a similar fund operated by AOL.

But by Thursday evening, Arianna Huffington--who was traveling in Brazil--said Arrington was no longer employed by TechCrunch.

"Michael has stepped down and is no longer on the editorial payroll effective immediately," Huffington said. Arrington would be allowed to continue to write only as an unpaid blogger, Huffington said.

On Friday, an AOL spokeswoman, confirmed Huffington's statement: "Michael's role has changed. He now works within AOL Ventures. He's becoming a professional investor. He is no longer involved in editorial." Arrington declined further comment until "Arianna has made her last statement."

But by Monday, Arrington's role at TechCrunch remained unclear.

"TechCrunch is on the precipice," MG Siegler, a noted TechCrunch writer, wrote in a post on TechCrunch late Monday. "As soon as tomorrow, Mike may be thrown out of the company he founded. Or he may not. No one knows. And if he is, he will be replaced by—well, again, no one knows. No one knows much of anything. Certainly no one at TechCrunch."

"Again, none of us know for sure--including Mike," Siegler added. "But I have a really bad feeling."

CrunchFund, Siegler noted, was launched with the full support of AOL, only to be throttled by "nonsensical political infighting and really poor communication."

"To make matters worse, some [journalists] have proceeded to pile on, despite having no real knowledge--at all--of the way TechCrunch actually works," Siegler wrote. "And now here we are."

Mario Ruiz, a spokesman for the AOL Huffington Post Media Group, did not immediately return an email from The Cutline seeking comment Tuesday.

But Armstrong promised to leave Arrington and TechCrunch alone. "Tim told me that he doesn't want whatever makes TechCrunch special to go away," Arrington wrote announcing the AOL sale to TechCrunch readers. "He also said it was important that we feel free to criticize AOL when we think they deserve it. And the agreement we signed with AOL fully reflects this."

"For 11+ months, they've kept their word, and things have run beautifully from our end," Siegler wrote. "Now they may break their promise to us. And if that promise is broken, it will break TechCrunch."